The authors, Thomas Stanley and William Danko, are professors who devoted their careers to studying the habits of self-made millionaires—people who have become millionaires without the help of an inheritance.

Common Characteristics of Millionaires

Stanley and Danko found several common habits that millionaires share, including:

They live in “less house” than they can afford, especially while they’re growing their wealth. Most of their neighbors are non-millionaires.

More than half never received even $1 as an inheritance.

Almost half never received any money for college tuition from their family.

Nine out of 10 millionaires never received $1 worth of ownership in a family business.

Self-made millionaires have frugal spouses. The authors told one particularly compelling story about a husband who, after reviewing his net worth, announced to his wife that they were officially millionaires. The wife ​nodded, then went back to clipping coupons.

Millionaires are business owners. Some have full-time jobs plus side businesses, while others are full-time business owners. “Self-employed people make up less than 20 percent of the workers in America but account for two-thirds of the millionaires,” the book says.

The one area in which they generously spend money is on their children’s education.

Millionaires Budget, Too

And, of course, my favorite observation:

The majority of self-made millionaires budget and track every penny. They know how much they spend on groceries, gas, and every other household line-item.

The authors say:

“Planning and controlling consumption are key factors underlying wealth accumulation … Operating a household without a budget is akin to operating a business without a plan, without goals, and without direction.”

What, Why, and How

Millionaires start with a “big picture” goal. They envision how they hope to save, invest, and accumulate assets. These big-picture goals represent “what” they want to achieve and “why” they want to achieve it.

Budgeting and tracking expenses represents the “how.” Self-made millionaires monitor their outflow of money to see if their spending is aligned with their big-picture goals.

They clip coupons, wear inexpensive clothes, and drink domestic beer. Or, as the academic authors put it, “They often live in self-designed environments of relative scarcity.”

They make budgets, track their money, and figure out how they can cut spending so they can invest more.